Lost in Translation: Global markets

Running a successful global business can present a broad range of challenges, which have only increased in recent years due to the macroeconomic volatility. This is especially challenging for organisations when there becomes a need to deal with non-core or loss-making operations overseas.

In our Lost in Translation report, we analyse loss-making foreign operations in relation to ultimate owner countries (the locality of the company’s registered headquarters) and loss-making subsidiary countries (where the locality subsidiaries are outside of the headquartered country). We also cross examine these figures by the top loss-making sectors per country.

Our report has highlighted that, per filed accounts, there are 181,000 foreign owned businesses, operating outside of their ultimate parent company’s country. 20% of these are generating operating losses totalling a staggering €158bn and these are just the ones we know have been reported, the reality is there will be many more. 

If we look at the analysis by country, we can see that the United States owns the highest share of foreign loss-making subsidiaries both by value and volume. This is followed by Germany and the United Kingdom, and all three account for 33% of the loss-making population by volume. The top three countries with loss-making subsidiaries, perhaps unsurprisingly due to the ownership figures, include the United Kingdom and Germany, as well as Ireland. These three account for 45% of the total loss by value.

Our sector analysis is also insightful, with transportation, hospitality and services; banking and capital markets; and telecoms, media and entertainment businesses accounting for nearly 45% of the total loss by value.

Overall, the sheer volume alone indicates a need for Value Creation levers that could be deployed by corporates and investors to tackle these challenges and enhance shareholder value.

Read our Lost in Translation report to find out our other key findings from the analysis and contact our team to see how we could support with assessing options to improve overall group performance.

Please get in touch with Dave Sharman or Lucy Julian.